Redfin 2022

Redfin 2022 Proxy Score 63

Redfin 2022 annual meeting is June 14, 2022, at 10:00 am Pacific. It is a virtual-only meeting on the Broadridge platform. Of course, I (James McRitchie) recommend voting in advance, especially since many companies cut off voting as soon as proposals have been presented. To enhance corporate governance and long-term value, vote Against Julie Bornstein, Selina Tobaccowala; For all other items, including Amend Proxy Access Right. 

Redfin Corporation operates as a residential real estate brokerage company in the United States and Canada. Below, is how I voted and why.

I voted with the Board’s recommendations 63% of the time, so Proxy Score 63 out of 100. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).

Read Warnings. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.

Redfin 2022: ISS Rating

From the Yahoo Finance profile page: Redfin Corporation’s ISS Governance QualityScore as of May 1, 2022 is 5. The pillar scores are Audit: 5; Board: 6; Shareholder Rights: 5; Compensation: 5.

Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk.

Redfin 2022: CorpGov Voting Recommendations

Following Most of Calvert’s Votes
CalvertCorpGov
1aElect Director Julie Bornstein

Rationale:  The board comprises fewer than two people of color or is less than 40% diverse overall.
AgainstAgainst
1bElect Director Brad Singer

Rationale: Vote FOR remaining director nominees warranted.
ForFor
1cElect Director Selina Tobaccowala

Rationale: Vote FOR remaining director nominees warranted.
ForAgainst
2Advisory Vote to Ratify Named Executive Officers’ Compensation

Rationale: Pay and performance are reasonably aligned.
ForFor
3Ratify Deloitte & Touche LLP as Auditors

Rationale: In the absence of concerns, a vote FOR is warranted.
ForFor
4Declassify the Board of Directors

Rationale: Increased accountability.
ForFor
5Eliminate Supermajority Vote Requirements

Rationale: Reduced supermajority vote requirement enhances shareholder rights.
ForFor
6Amend Proxy Access Right

Rationale: Elimination of the 20-shareholder group limit would improve proxy access right.
FORFor

Redfin 2022: Board Proposals

Highest NEO pay was Ee Lyn Khoo, former chief human resources officer at about $3M is excessive for a small-cap. Additionally, the CEO-to-worker pay ratio was 4:1. While I voted in favor of Pay, I voted AGAINST the compensation committee member (Selina Tobaccowala), given the excessive pay to Ms. Khoo.
Deloitte & Touche LLP has been the auditor for 9 years. At some point, auditors can lose their independence if the relationship is too long. I voted For.
Proposals to declassify the board (#4) and eliminate supermajority requirements are both positive initiatives. Vote For.

Redfin 2022: Shareholder Proposal

As my proposal #6 on proxy access states: “the most essential feature requested is that shareholders forming a nominating group not be limited with regard to the number in a participating group.”

Proxy Access in the United States, a cost-benefit analysis by CFA Institute, found proxy access would “benefit both markets and boardrooms, raising US market capitalization by up to $140 billion.

The Redfin Board filed a weak form of proxy access bylaws after reviewing my proposal. It limits nominating groups to 20 shareholders. They contend “our four largest stockholders each own over 9.5% of our outstanding common stock and our 20 largest stockholders in the aggregate own approximately 80% of our outstanding common stock. There are many opportunities for groups of much less than 20 stockholders to aggregate their shares to reach the 3% ownership requirement.”

However, such a scenario lacks credibility. Most of our top stockholders have a business model based on low costs. They have never filed a shareholder proposal, so are highly unlikely to go through the expense of proxy access.

The Board’s opposition statement also whines that Redfin “could incur extraordinary administrative costs associated with verifying the ownership of the large number of stockholders aggregating their ownership to use proxy access.” However, the real costs would be borne by nominating groups. My proposal is advisory. The Board can easily require that shareholders gather and submit proper documentation. It could even require verification by a third party, paid by nominating groups.

The CFA study estimating a $140B rise in market cap was based on proxy access having no limit on the number in participating groups. Like Redfin, most companies have limited groups to 20 members. As a result, proxy access has only been used once — to return a founder to a board. The anticipated $140B in economic benefits has failed to materialize. Redfin should not be afraid to take a leadership position, instead of following the sheep.

Limiting groups to 20-members does not provide a proxy access right, it provides a proxy access illusion. Vote FOR proposal #6 real proxy access. Only real proxy access will motivate current directors to work on behalf of shareholders.

Other Recommendations

I am voting early. Before voting, you might want to look up a few fund votes in our Shareowner Action Handbook.

Redfin 2022: Issues for Future Proposalsinsightia

Looking at insightia for anti-shareholder provisions:

  • No requirement to separate CEO and Chair
  • Shareholders cannot take action by written consent or special meeting
  • Unopposed directors can be elected with a single vote, instead of a majority even though our proposal to move to a majority vote standard passed with more than 98% of the vote in 2021.

Redfin 2023: Mark Your Calendar

If you wish to submit a stockholder proposal for inclusion in our proxy materials for the 2023 annual meeting, then we must receive your proposal at our principal executive offices no later than December 29, 2022. Please review the SEC’s Rule 14a-8 for the requirements you must meet and the information you must provide if you wish to submit this type of stockholder proposal.

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